Banks take advantage of customers’ difficulties

Not only are Quebecers carrying more debt on their credit cards, but the already high interest rates on these cards have recently increased at banks here.

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At Laurentian Bank, the rate rose to 20.99% from 19.99% on February 13. The previous increase was in 2012.

At the other Quebec bank, Nationale, the rate is 20.99% as of 2019.

“They take advantage of the consumer’s predicament,” says Sophie Roussin, a personal finance and debt analyst at the Union des Consommétures.

Desjardins, the only financial institution in Quebec, is currently maintaining its interest rates on purchases at 19.90%.

Elsewhere in Canada, all major banks are posting a rate of 20.99% except for Royal Bank, which just announced it will move to this rate in April.

Ms. Roussin noted that with inflation, people are looking for money. She lamented that financial institutions no longer offer small loans of $500 or $1,000 “for a long time” and that consumers have little choice.

“People will use their credit card if they have an excellent credit report and don’t have access to a home equity line of credit that offers a low interest rate,” notes the debt specialist.

Worse among low incomes

The trend is confirmed. The Equifax agency indicated Thursday that the use of credit cards is growing in Quebec, particularly among low-income earners and young people.

“With the rising cost of living, there is no room for maneuver in this segment of the population,” opined analyst Jean-Philippe Samure.

1,220,000 Quebecers now carry a month-to-month balance of $5,803 on average, a 5.5% increase compared to 2021.

With new credit card interest rates of 20.99% instead of 19.99%, this represents an additional payment of $58.03 per year.

Rates are already too high, notes Sylvie de Bellefeuille, lawyer and budget advisor at Choice consommateurs.

“It’s not huge, $60 a year, but it’s another factor to pay for in many other things, like housing or groceries,” she said.

Never decreased

She was particularly hurt to note that during these historically low key rate years, credit card interest rates did not drop as much as mortgage rates or lines of credit.

“It’s unfortunate that it’s one-sided. Banks are taking advantage of the key rate hike to raise credit card rates, but they haven’t done the opposite,” she observed.

Above interest rate Credit card purchases in Quebec

• Capital One: 19.80%
• Gardens: 19.90%
• National Bank: 20.99%
• Laurentian Bank: 20.99%
• Royal Bank: 20.99% (from April)
• MBNA: 20.99%
• Scotland: 20.99%
• TD: 20.99%
• CIBC: 20.99%